If you are bemoaning the "large" drop

Investment Analysis Clubs Saul’s Investing Discussions
1

If you are bemoaning the “large” drop in your portfolio over the last two days, a little perspective might help relax you.

You might look back and see that, at today’s close, you are about 8.5% above where you were two weeks ago last Friday (May 8th) and remember that you were actually ecstatically happy with that close.

You might look back and see that, at today’s close, you are about 5.2% above where you were two weeks ago this Monday (May 11th) and remember that you were even more ecstatically happy with that close.

You might look back and see that, at today’s close, you are even about 1.0% above where you were two weeks ago yesterday, (May 12th) and remember that you were so happy with that close, you could hardly believe it.

You might look back and see that, at today’s close, you are even about flat with where you were two weeks ago today, (May 13th) and remember that that was so wonderful you were peeing in your pants.

You might look back and see that, at today’s close, you are EVEN 0.5% above where you were at LAST Monday’s close, (May 18th) and remember that all that has happened is that you lost four days of gains, that is the gains of Tues, Weds, Thurs, and Fri of last week!!!

You might look back and decide that that’s really not worth being upset about.

I hope that that helped.

Saul

A link to the Knowledgebase for this board is in the Announcements panel that is on the right side of every page on this board.

For some additions to the Knowledgebase, bringing it up to date, I’d advise reading several other posts linked to on the panel, especially “How I Pick a Company to Invest In,” and “Why My Investing Criteria Have Changed,” and “Why It Really is Different.”

97 Likes
2

Thank you, Saul !

I don’t have much of that age old mental problem of “losing while gaining”. Perhaps a problem could be “perspective” which is what you just described. And we do need to keep perspective in mind while investing.

I’ve known some who are “waiting for a dip to buy more” and when that dip finally arrives they are upset because of the loss … so what do they do? … Sell !

Yee gads … what kind of “investors” are they?

Thanks again,
Rich (haywool)

5 Likes
3

And you might look at the intraday charts and see that, many of those stocks are already 3-5% above their gap down opens, rotation selloff morning low, and remember that this is why it’s a bad idea to put in stop loss orders in on these stocks because these bot-driven allocation rotations are moving huge speculative blocks of money around with absolutely no thought!

15 Likes
4

I’ve been following this board for a couple of years and already owned some companies discussed here b/c they had been Stock Advisor recommendations.

Starting in March 2019, I began evaluating and selling some more traditional companies that had not grown much in recent years and that did not seemed set for significant future growth. I used some of the money to open new positions as well as to increase positions in companies discussed on this board.

I also used some of the money to add to more traditional positions (including Stock Advisor recs not discussed on this board).

Finally, I added or increased positions in a few REIT’s for dividends.

Since March, 2019, the total return average of the Saul’s Board stocks is 52% which includes a high of 163% (TDOC) to a mere 4.66% (a recent AYX buy) to a -23% return (December ROKU buy)s.

Meanwhile, if I had held the companies I sold, that part of my portfolio would have a -5.24% return.

The more traditional and REIT buys have returned -16.30%. Many of those were made from November, 2019 – February, 2020, so I did buy quite a few at the high point before the big drop (especially the REIT’s).

This morning, after the “big two day drop,” I sold out of a long and profitable dividend position (which had gone up the last few days) in my Roth IRA and used the money to add to AYX, DDOG, CRWD, ZM, and TDOC. I also opened a small DOCU position.

ZM, TDOC, and DOCU have had nice run-ups due to the WFH and coronavirus related issues, but many on this board see more significant growth ahead. The other three have done well since the March sell-offs. I had been planning to add to some of these holdings, so this seemed as good a time as any to make these moves.

Despite recent declines from the highs of a few days ago, applying what I’ve learned from this board over the past year has led to better returns, and I am grateful for the knowledge shared here.

All the best,

Raymond

26 Likes
5

I second FlyingCircus – I learned many years ago never to place an intraday stop loss for exactly the reason they mentioned. I’ve found that I place those darned intraday stop losses when I’m either (a) anxious or (b) lacking confidence in my position or both. More than once I’ve placed a stop loss on a highly volatile, low volume stock and then watched the bid price slowly notch down, trigger my stop loss, then turn around and advance several percent – all in real time. If I weren’t paranoid I would swear that the market maker was intentionally triggering my trade.

I usually do best when I don’t set a stop loss at all and remind myself that I trade for the long term, and either let the stock run (because I was confident that I’d bought the right stock in the first place) or I exit with no trepidation after confirmed bad news that affected the fundamentals.

5 Likes
6

As someone who is very fresh to investing with my first purchase on 3/31/2020 (ETSY) followed shortly after by SPLK/TWLO/TTD/SE/SQ/NVTA/AMD, which have performed admirably. However, I was a little late to the success of the SaaS companies that are well received on this board. I bought into them and tried to select ones that I felt were more fairly valued at the time and that I felt would be good positions to start at this time. My aim wasn’t to time the market persay but simply to mitigate risk, so I had avoided temporarily names with very steep valuations (DDOG, OKTA, ZM for example)

It is certainly hard to not feel like I should have just waited to get a better entry or that I missed out, but things weren’t so clear last week. My worst performing positions now are in the group of ROKU, LVGO, NET, AYX, FSLY, ESTC, WORK, CRWD but that’s simply a marker of when I bought them. I haven’t lost any conviction in their business models etc., but I can’t say that I wasn’t a bit jarred by the last couple days or a bit concerned that we have a heavy sector based correction looming that unfairly punishes tech companies that aren’t dependent on COVID for their success, as some are portraying them.

I’m holding long and anxiously awaiting what comes next!

1 Like
7

I only check my stock prices twice a week, so I did not even notice this. Ironically, I think checking less frequently makes you a better investor, since you don’t react due to emotion as much.

18 Likes
8

Mark19601962, thanks for mentioning how often you check your portfolio. I am trying to train myself to check less frequently. They say a watched pot never boils – sometimes it’s better to look away – yet, with the market, there is a strong temptation to see what is going on (and, hopefully, learn from those observations over time). On a day like today, when the indices far outperform the stocks I own, I remind myself that not that long ago (in March!) the numbers were a lot lower. It’s easy to forget.

1 Like
9

"I second FlyingCircus – I learned many years ago never to place an intraday stop loss for exactly the reason they mentioned. I’ve found that I place those darned intraday stop losses when I’m either (a) anxious or (b) lacking confidence in my position or both. More than once I’ve placed a stop loss on a highly volatile, low volume stock and then watched the bid price slowly notch down, trigger my stop loss, then turn around and advance several percent – all in real time. If I weren’t paranoid I would swear that the market maker was intentionally triggering my trade.

I usually do best when I don’t set a stop loss at all and remind myself that I trade for the long term, and either let the stock run (because I was confident that I’d bought the right stock in the first place) or I exit with no trepidation after confirmed bad news that affected the fundamentals."

I’ve had the same exact experience - and the same suspicion that someone manipulated down to exactly the price of my stop just to trigger it.

OT - the italics worked!!! (It’s the simple things in life…)

1 Like
10

I only check my stock prices twice a week, so I did not even notice this. Ironically, I think checking less frequently makes you a better investor, since you don’t react due to emotion as much.

That’s conventional wisdom, but I think an even better strategy would be to work on emotional discipline, so you can check for opportunities/news on a routine basis but not let price swings influence you.

There is a principle in behavioral finance, that says, a $1 loss has twice the emotional impact as a $1 gain. Also if someone gains $1000 but then loses $500, they will be more upset than someone that just stayed at $0.

17 Likes
11

newdocinvestor - I’m not as well informed on the SaaS companies you mentioned, but I know LVGO pretty well, and it’s my largest holding. I’m very comfortable continuing to hold it through all the ups and downs. I expect very good Q2 numbers. I almost added to it on the dip today (even though it’s already my largest) but decided to diversify a little instead.

4 Likes
12

I was “bemoaning”, but I wasn’t really planning to do anything about it. I’m pretty certain in the choices I’ve made, but there are times when silence is deadly… you start to overthink things and wonder “what am I missing?” It’s sometimes a fine line between thinking for yourself and “group think” especially as most of us have arrived here somewhat independently.

So thanks Saul for posting this reassurance.

3 Likes
13

Not sure what you mean by OKTA and VEEV reported well this morning, since both release their earnings report after the close today.

1 Like